Custom Motorcycle Cruiser

Harley Davidson

Marketing Analysis

The Harley-Davidson Motor Company is the leading American manufacturer of heavyweight motorcycles, focusing mainly on heavy bikes geared towards long distance cruising. Based in Milwaukee, Wisconsin, Harley-Davidson is uniquely known for their reputation, design, engine sound, and loyal, cult-like following.

Although the company now enjoys record breaking annual revenue and income, it faced economic hardships in the middle of the 1900s. In 1953, Harley-Davidsons main domestic competitor, Indian Motorcycle, stopped production. Nevertheless, Harley began to stagnate and lose market share to Japanese companies like Honda and Yamaha. Harley went public in 1965, but the limited capital investments received werent enough to rescue the ailing company. In 1969, it was sold to conglomerate American Machine Foundry. Under AMF management, Harleys quality plummeted, as did its popularity. In 1981, AMF sold Harley to 13 investors, one of which was Willie G. Davidson, grandson of co-founder William Davidson. To cut costs due to declining sales and inefficiencies, this new group laid off forty percent of Harleys workforce. At this time, the company had lost market share from approximately seventy percent to twenty-three percent. Now, executives look back and reason that, the name on the gas tank never changedbut it how we felt about our customers. We didnt give them quality and reliability or price value (Teerlink). However, the way Harley-Davidson does business today reflects upon the wisdom gained from their troublesome history. The company credits its workforce as one of its most valuable assets, recognizing their people as the ones who bring about changes regarding the level of quality, reliability, and technological innovation that make their products exceptional and distinct.

Harley-Davidson also attributes their success to their loyal customer base. The target market for the general industry consists predominantly of males aging from their early forties to as old as sixty-five. More specifically though, Harley-Davidsons creation of and dominance in the large displacement motorcycle market, also known as the Fat Boy, provides them with the exclusive attention of the baby boomers, particularly ones with disposable income who seek to replicate the bad-boy image associated with Harleys. This group is attracted by Harley-Davidsons cruising models, allowing consumers to portray an image as weekend warriors who want to exhibit a rebellious, untamed kind of nature. This is a huge contrast to the targeted consumers of other companies, like Honda, Yamaha, and Suzuki, whose sleek, sports-like bikes attract a younger following meant for racing, stunts, and aestheticism. However, the Baby Boomers, who transformed Harleys rumbling, lumbering bikes from countercultural totems into American icons, are beginning to enter their senior years (Parry). Harley-Davidson reported that for thirteen consecutive years up to 2004, the Baby-Boomer group as a percentage of sales had been increasing at a rate of one to four percent every year, and last year, for the first time in 14 years, it grew less than one percent (Miller). The company also speculates that over the next decade, the male Baby-boomers will consistently decline as part of their sales, thus forcing Harley-Davidson to find other market segments to rely on.

A few groups Harley has scrambled for and have found temporary relief from are women, blacks, and Hispanics, groups that have not been traditional Harley-Davidson riders (Righton). Proof that Harleys efforts to attract these groups have been working is the fact that female consumers have increased four-fold in recent years. Women now account for one in ten new purchases, a huge increase compared to the one in fifty the company estimated fifteen years ago. Furthermore, female-based riding clubs are popping up all over the country as thousands of women discover camaraderie in riding organizations. As a whole for the industry, the number of women who have their own bikes is multiplying, amounting to approximately 36 percent or 635, 000 bikes. Although marketing results for the other two groups are unknown, the extensive campaign to recruit these demographics should prove useful in the long run.

Harley-Davidsons competitors are BMW Motorcycle and Suzuki, Yamaha, or Honda. BMW is mentioned first because it is Harleys primary competitor, especially considering the images of the companies are similar. BMW Motorcycles image revolves around the riding experience, as riders see themselves as the gritty warriors of the road (A Strategic Approach To Marketing). BMW riders are seen as the type of people who go on long trips, which is why BMW introduced a cruiser model, with high quality and more refined features than the motorcycle offered by Harley (A Strategic Approach To Marketing). BMW also offers a lightweight bike with a powerful engine, maneuverability, and a higher quality standard, an attempt to compete with the Japanese sports bike. Their approach to marketing their motorcycles encompasses widespread advertising and a focus on discovering and fulfilling the customers wants. Regardless of BMWs efforts to compete in this product type, Harley still maintains a 62% market share on large displacement motorcycles, also known as Hogs.

On the other hand, although Honda, Suzuki, and Yamaha are not significant factors in the niche market of Hogs, these companies do play a role in diverting attention from and providing an alternative to Harley-Davidson. Even though many young riders regard Harley machines as awesome bikes, they dont go for them (Fawl). These Japanese companies provide sports bikes that attract young riders, ages 18 to 35, who are looking for light bikes with better, race-quality handling. In addition to this appealing style, these sportier bikes also cost a lot less than Harleys, typically ranging from $6, 000 to $13, 000. Thus, Harley-Davidson is more well-known for its older demographic who is willing to spend $25, 000 on a motorcycle for recreational use.

The marketing mix for Harley-Davidson is extremely unique compared to other industries and their products. Harleys most significant and effective asset is their brand name and image. Within the last two decades, the company has been carefully molding an attitude or persona associated with their brand name and bikes. Hollywood helped cultivate the bad-boy image of Harley motorcyclists with movies such Captain America, Easy Rider, and The Wild One. These movies, as well as several others, continuously showed big, mean motorcycles driven by big, mean men out looking for trouble (Prashad). With this in mind, the company made consumers feel that they were not only buying a means of transportation, but an icon that represented who they really were, a self-perceived renegade. Although other bikes may have been fast, quiet, fuel efficient, comfortable, and reliable, from the consumer perspective, none said bad-ass like Harley-Davidson (Nakashima).

However, the company can not be credited with all the success. Due to Harleys consumer negligence in the late 1970s and early 80s that almost caused the company to spiral into bankruptcy, another focal point of their marketing scheme was to stay in close touch with their customers. Harley did this by organizing the Harley Owners Group, which now has a membership of little over 1 million. The group was meant to create a community and a sense of belonging, making members feel good about who they were. The group was also used by the company like one enormous focus group who would voice their opinions and thoughts about the bikes to the company, helping them attain insight and the ability to give consumers the changes they wanted. The organization helped bring another valuable dimension to Harleys image, visibility. Riding a Harley instantaneously made individuals stand out, and sometimes was associated with sexuality, making a person immediately more attractive to the opposite sex, said Ken Schmidt, former director of communications at Harley-Davidson who helped rebuild the company in the 1980s.

Although the Harley brand and organization are sometimes regarded as a cult, some marketing experts think that may not be a bad thing. For example, BJ Bueno has earned his living promoting cults. He believes that a cult is not something to be feared or looked down upon. Bueno simply defines a cult as being people being people, doing what they love and feeling part of a community of people who feel the same way. Harley-Davidson has done a great job understanding and fostering the organization, meanwhile building positive relationships with their buyers.

Furthermore, an additional benefit of the Harley Owners Group is that word-of- mouth and potential referrals further the reputation of the brand, exposing it to new people and customers. When buyers feel good about themselves and can associate that feeling to a particular product and brand, then it is almost certain that people will pass the news onto others. Douglas Atkin, partner and chief strategy officer at an advertising agency, believes that:

When someone is born again as a Christian, that is an acutely personal, very, very transcendent, mysterious moment. When I talk to Harley-Davidson riders, they would talk about their experience of riding a motorcycle in the same terms as someone describing the transcendent moments of their religion. It took them out of the everyday. Their experience was on the edge. They felt transported to a different place. Thats where the mystery lies. There can be no mystery in how we communicate to consumers. The mystery has to come from the experience of the brand.

This type of thinking is extremely advantageous for Harley-Davidson, because the burden of marketing is somewhat lifted from their shoulders and the power and credibility of the message is multiplied as it comes from individuals with no economic stake in the company.

Moreover, Harley-Davidson, anticipating the eventual decline in Baby-Boomer sales, has also developed a marketing strategy to seek female, black, and Hispanic riders. To reach women, Harley has put full-page advertisements into magazines such as Jane, Allure, Glamour, and two other Cond Nast magazines. Harley hopes to provide women with the opportunity to escape crying babies, stressful jobs and high-maintenance relationships in exchange for the winding, open roads (Righton). In addition, the company is manufacturing bikes with lighter frames, custom fit gears, and lower seats, in hopes of showing women that Harley can accommodate them (Righton). For the black community, Harley has begun to sponsor the nationally syndicated show of Tom Joyner, an African American radio host who reaches approximately 8 million U.S. listeners (Johnson). Harley is also heavily advertising during the NCAA Basketball Tournament as well as sponsoring the Roundup, an African American gathering of riders in Sturgis, South Dakota. Then to capture the attention of Hispanics, the company is publicizing the Harley name in two magazines, Hombre and Fuego, meanwhile joining low-rider shows.

If that isnt enough to capture the attention of these demographics, Harley has a long-term strategy. Harley-Davidson is trying to recruit diverse groups of people into its work forces, believing that without a diverse work force, you wont have diverse customers (Johnson). One way Harley is accomplishing this goal is by increasing the diversity of its job applicant pool, requiring the company to recruit from business schools in predominantly black colleges and universities. Eric Reisner, vice president of strategic programs, goes further to say that to increase customer diversity, businesses need to transform the way they think about U.S. markets. Different cities have different economies and companies need to do a better job of targeting them. By obtaining a diversified work force, Harley will bring fresh ideas and perspectives to the table in hopes of uncovering techniques to charm and interest future clientele.

On another note, Harley Davidson also receives great public relations from high profile celebrities and government officials who are motorcycle buffs. People in the public eye who ride Harleys are able to boost the image of the company and show that the product is good enough for them too, building credibility for Harley and loyalty among others. For example, Vice-President Dick Cheney made an appearance and speech at a Harley production plant. In another case, Joshua Bolten, President Bushs new chief of staff, is known to be a Harley fanatic, once bringing a gas tank to a Cabinet meeting for the President and Vice-President to sign it. Other notable personalities who are dedicated to the Harley brand are professional wrestler The Undertaker, riding into events on his roaring Hog, comedian Jay Leno, and singer Elvis Presley. Considering the high visibility of these celebrities as well as the respect they entertain from fans and followers, Harley-Davidson is being given great publicity, name recognition, and value, especially since all these celebrities have widespread media attention.

As a whole, the Harley-Davidson company seems to be managing their brand and marketing strategy in an excellent fashion. It is easy to criticize some ideas and recommend better ways, but the fact of the matter is, the numbers speak for themselves. Harley reported $5 billion in sales and $1 billion in profit last year and regardless of the slow down in growth in the Baby Boomer market, the new dealerships Harley-Davidson is opening in Beijing, China are ways of tapping into new markets that may mitigate the loss. There, Harley anticipates customers will begin to understand and appreciate the Harley lifestyle. However, the company also realizes that this will prove to be a challenge when trying to gain insight in order to penetrate a population with limited, but growing, disposable income (Fredrix). This move seems to be a logical step towards expanding the brand name to other cultures and gaining early exposure.

In its expansion to reach other demographics, Harley seems to be on its way to success. The idea of the Harley Owners Group has given the brand name, image, and company a boost and sense of credibility it could have never created on its own. The more than one million members are sure to be a great source of word-of-mouth promotion. A valuable dimension to the organization is that it creates a sense of community and belonging, encouraging newcomers to take the chance and join the group without feeling apprehensive about being alone or against the crowd. The ambiance of the association revolves around the riding experience and the way it enhances their feelings about themselves, and by relating that sense of self-esteem, power, and attention to the Harley brand, the community will flourish.

In addition, Harley also succeeds because of the focus points of their promotion. The sales people at dealerships do not focus on the particular product itself, although that is important to. After mentioning that much of the Harley is chromed out, packs a 1300cc engine and maintains its retail value extremely well, the sales force seems to be more interested in extending the Harley experience to the customer. For example, sales people emphasize that its a little escape from the realities of life, and the road is where one can be in control of their destiny (Righton). This approach truly engages a buyer into believing that they are just not paying for the product, but deciding upon a certain type of lifestyle that will determine who they are.

The recruiting efforts on the part of Harley-Davidson are a practical way of diversifying their clientele. Giving an opportunity to predominantly black universities will encourage them to believe that Harley is not just a white mans brand, but one that is willing to encompass people from all walks of life. Research has also shown that a buyer usually feels more comfortable and less incredulous when a sales representative of similar ethnicity serves him, as there is a sense of brotherhood and trust (Atkin). This will be a great advantage in the future when other companies lag behind Harleys leadership.

However, a few recommendations for Harley would benefit them. For one, Harley should maybe host its own bikers rally, like the one sponsored by Bike Week in Daytona Beach. This way, the company would have control over the events for the rally, because many female riders felt alienated by other rallies. For example, one female rider exclaimed:

There is still a struggle against stereotypes. At Bike Week, some female riders complain that one of the only events specifically involving women is a coleslaw wrestling contest which female riders say only serves to perpetuate misconceptions about them.

Estranging an up and coming economic force does not necessarily reflect badly on Harley-Davidson, but a rally or event sponsored by the company addressing these issues and stereotypes would insure a lifetime of brand loyalty and a positive, understanding sentiment.

In another thought, the company would also gain awareness and fascination among viewers if it promoted itself through movies where the courageous, almighty hero was riding a Harley-Davidson. This would combat the sometimes negative media attention it receives. For example, Harley-Davidson and gangs have been associated since the 1940s when the Hell 's Angels adopted Harleys as their motorcycle of choiceand undoubtedly, part of the brand's popularity is its dark, almost underworld edginess (Sharda). However, when eight members of a biker gang are recently found dead, the company must find a way to avoid connection to the gruesome news. Once again, through the use of Hollywood, the company can empower and entertain movie-goers by providing a Harley-riding hero, giving them that burst of adrenaline when they think of motorcycles.

Overall, the economic success the Harley-Davidson Motor Company has been enjoying the last two and a half decades is indicative of a well-thought out market strategy that seems to be working effectively to induce increasing sales and continued growth. Over the years, Harley has carefully structured a very powerful brand image and developed an incredible repertoire with its clientele, which will drastically help them promote their quality product in new markets. There is just not much any critic can say to Harley-Davidson to improve itself. The sales figures, gross margins, and their cost-cutting abilities speak for themselves, as for several consecutive years, they have announced record-breaking numbers and motorcycle ownership. Harley-Davidson just seems to be doing everything right, and has begun to prepare for the future, with a marketing strategy that attempts to increase the companys reach and diversify its demographics.